A recent forecast from the financial institutions indicates that the Christchurch real estate market may be going soft in 2022. These reports speak about a drop of 6% by the end of the calendar year; higher than the previously reported forecast of 2.9%.

Economy pundits have already opined that a market slowdown is a welcome change after the massive inflation on the backs of high mortgage, tighter credit conditions, and surplus inventory.

The fall rate is expected to increase after the January house price index reported drops in the no. of completed sales. As the market’s supply/demand hangs in the balance, what does this mean for the Christchurch market?

We can gauge the Christchurch real estate market better by pitting its performance against the rest of NZ.

Unsold listings indicative of NZ housing price correction

The house prices boom that swept the nation in the past quarter of the financial year, banked largely on consumer spending. The drop in house prices shall likely affect the liquid wealth that consumers so far relied upon to back their borrowing.

National data shows that there are newer listings on the market, simultaneously as soft sales spell unsold inventory across NZ. Unsold assets figure 40% higher than they did compare to the lows of mid-2021. Nationwide property listings are up at 7.5% year-on-year, as of February.

Tighter loan-to-value limits and new lending rules are also bottle-necking housing demand. While those who purchased homes during the market high will not experience negative equity. But, they will certainly witness some loss; since it may take a few years for prices to climb back to the levels they were at the start of 2021.

Despite the 2.2% drop in home prices, since December 2021, the median value of houses across NZ remained at $880,000 in January. This meant a 20.5% year-on-year median value hike, including the depreciation.

CY2021 Q4 Reports a bearish housing market across NZ

Reports from trusted real estate publications forecast a slump in the coming months of this year, with Westpac already exhibiting the biggest slices in home prices, at 13%. Westpac’s home value fall is expected to continue into 2023, and through to 2024.

Experts have already remarked on how the rising mortgage rates coupled with consumer spending managed to prevent Westpac home value declines last year. However, now its market is giving every indication of the market losing momentum, sooner than expected.

Thankfully, the robust household income and labor market levels will still ensure the prices recover once the price correction saturates. A 7% drop is still considered a ‘soft landing’ among experts, as prices have climbed by 40% since the pandemic outbreak.

Christchurch Housing Market Updates for FY2021-22 Q4

Christchurch’s escalating housing listings are going to remain lucrative as long as they are in supply and have to catch up to Hamilton’s $861,000 or Wellington and Tauranga’s $1.1 million avg. house value.

In the months since the average house value in Christchurch has surpassed $700,000. There is a jump of 3.7% reported on the avg. house price, in the last 30 days alone- the largest for any major center, during that time.

The present-day avg. house price in the Christchurch real estate market is at $719,000, compared to last September’s $666,000. The price is 10% higher than its value last quarter, and a 35.5% jump on a year-on-year basis.

The increasing inventory and falling prices across the nation may be indicative of the slowdown. However, Christchurch’s massive price growth was still within the $1.1 bracket. Unless prices in other major markets can get on par with Christchurch’s competitive prices, the city should see a slower price decline.

Christchurch real estate market predictions for demand factor

A major factor for the hikes in the land availability for new properties, at half the price of major center listings, amid rising mortgage rates and tight lending conditions. Financing incentives like tax breaks and lower deposits on new listings, in Christchurch, are lucrative to these buyers.

Real estate listing sites report a 46% and 71% year-on-year rise, respectively, in Aucklanders and Wellingtonians searching for property in Christchurch. Plus, in 2021, 2.3% more Aucklanders were looking at Christchurch properties, between August 18-November 16, than the year before.

That 2.3% spells about 178,000 Aucklanders interested in Christchurch property. The lockdown restrictions are also convincing a lot of these parties to consider a move away from Auckland when they can own and remote work from the similarly configured property in Christchurch, for half the price.

The rebuilding phase that the city is undergoing is generating some interest in the 20-30-year old demographic of first-time buyers and investors. The latest batch of rebuilds in the city is further in adherence with new seismic requirements and codes, which makes them more sought-after.

If you are planning to buy or invest…

Waimakariri and Selwyn are two other centers that have recently gained prominence after showing housing market patterns similar to Christchurch. Dunedin can offer tough competition if it steps up the quality of listings given that it’s avg. house value is even lower than Christchurch.

Christchurch has already depicted strong growth since August 2021, after coming out of the first national lockdown. Now, 10 of Christchurch suburbs have risen above $1m in median house value offering stiff competition to other major centers. Invest now in other Christchurch locations before demand pushes their price to equal or surpass this Top 10.

According to expert Christchurch real estate market predictions, a combination of this good value proposition listings and momentum in prices, should keep attracting buyers from Auckland and Wellington, and support a 35% annual growth rate for the Christchurch market in 2022.